Executive Summary

The federal Supplemental Nutrition Assistance Program (SNAP) is the most important food assistance program in the United States. SNAP ─ formerly known as the Food Stamp Program ─ is an entitlement program, which means that access to benefits is guaranteed by law to all those who meet eligibility requirements. SNAP is a key part of our nation’s safety net and responds quickly to changes in need. During the Great Recession, SNAP enrollment has grown by 20 million, enabling struggling families to afford healthy meals. In 2010, SNAP moved more than 5 million people, including 2.2 million children, above the poverty line.

The powerful anti-poverty effects of SNAP are being threatened, however, by proposed cuts in Congress. The deepest cuts have been proposed by the Agriculture Committee in the House of Representatives. The Committee’s version of the “Farm Bill” — the legislation in which SNAP is periodically reauthorized — would cut funding by $16.5 billion over the next 10 years. Most of this reduction would come from eliminating states’ ability to use of “broad-based categorical eligibility,” which streamlines SNAP eligibility determinations by allowing states to enroll low-income households based on eligibility for other federal means-tested programs. Forty-five states, including Illinois, take advantage of broad-based categorical eligibility to make it easier for families in need to receive SNAP benefits and to make state administration of SNAP more efficient.

The elimination of broad-based categorical eligibility would cause 1.8 million individuals nationwide to lose SNAP benefits each year and 280,000 school-age children to lose automatic eligibility for free school breakfast and lunch, according to the non-partisan Congressional Budget Office. The proposed cuts to SNAP would increase hardship for vulnerable children and families in Illinois and across the nation.

The Supplemental Nutrition Assistance Program (SNAP) is a federal entitlement program that helps low-income households purchase food. Formerly known as the Food Stamp Program, SNAP is funded through the U.S. Department of Agriculture (USDA) and administered by the states. Recipients are given an electronic benefit transfer (EBT) card with cash-equivalent benefits. EBT cards can then be used to purchase food at authorized retailers. Any applicant who meets SNAP eligibility requirements is entitled to receive benefits.

An Essential Part of the Safety Net

This powerful video by the No Kid Hungry campaign features real stories about how SNAP helped improve kids’ lives.

The Food Stamp Act of 1964 established a program to permit low-income households to receive “a greater share of the Nation’s food abundance.” Since that time, the program has had strong bipartisan support. Because the ability to acquire food is one of our most universal needs, the importance of being able to afford food is hard to overstate. Adequate nutrition is especially important for the healthy physical, cognitive, and social-emotional development of children. SNAP enables millions of low-income families to afford a healthy diet; nearly 90 percent of SNAP benefits are used by families to purchase fruits and vegetables, grain products, meats, and dairy products.1 Moreover, by supplementing a family’s ability to purchase food, SNAP enhances their economic security and enables them to meet at least some of their other basic needs such as housing and transportation.

SNAP Responds Quickly to Economic Downturns

Between 2007 and 2011, poverty in the U.S. increased dramatically. During this time, according to data from the American Community Survey, an additional 10.4 million Americans fell into poverty, including 3.3 million children. The nationwide poverty rate for children reached 22.5 percent. Illinois has seen similar trends. From 2007 to 2011, poverty among all state residents increased by about 384,000, including 132,000 children. In 2011, over one in five Illinois kids (21.6%) lived in poverty.

No other safety net program has responded as quickly and broadly as SNAP to this sharp increase in need. Since 2007, SNAP enrollment nationally has increased by 20 million people. In Illinois, overall enrollment increased by 615,000 ─ almost 50 percent ─ between June 2007 and June 2012 (see Exhibit 1).

The degree to which SNAP/Food Stamp enrollment tracks the number of Americans in poverty over time is striking, as Exhibit 2 illustrates. Since 1984, enrollment has risen and declined in tandem with poverty. And, while SNAP enrollment grew at a particularly high rate from 2009 to 2011, this is due mostly to the severity of the economic downturn and higher participation rates among eligible households.

For example, the deep recession has led to a record-breaking number of long-term unemployed Americans; more than 40 percent of unemployed workers have been without work for more than 27 weeks (about 6 months), much higher than the previous post-World-War-II high of 26 percent in 1983. As workers have exhausted unemployment insurance benefits and depleted their assets, SNAP has often been the safety net program of last resort.2

The economic crisis and its aftermath have also caused families to fall deeper into poverty. Partly in recognition of this deepening poverty, states have engaged in extensive outreach efforts to enroll eligible households. Consequently, USDA estimates that the overall SNAP participation rate increased from 65 percent of those eligible in 2007 to 72 percent in 2009.

SNAP Lifts Millions Out of Poverty

Recent research by the U.S. Census Bureau demonstrates just how effective SNAP is at bringing people out of poverty. The Census Bureau’s supplemental poverty measure includes the impact of various government programs and taxes. Using this measure, SNAP reduced the number of persons in poverty by more than 5 million in 2010. The effect was even greater for children, who constitute almost half of all SNAP participants. Children under age 5 represent about one in six SNAP recipients (see Exhibit 3), In 2010, SNAP reduced the number of children in poverty by 2.2 million.3 The Fiscal Policy Center estimates that, in Illinois, SNAP moved about 85,000 children above the poverty line.

Basics of SNAP

Both the federal government, through USDA, and state governments help carry out SNAP. In general, the federal government sets up the basic rules regarding SNAP, including how benefits are calculated, but gives states a substantial amount of flexibility in determining other aspects of the program, including certain eligibility criteria. SNAP is an entitlement program, meaning access to benefits is guaranteed by law to all those who meet program requirements. These benefits are funded by the federal government, while administrative costs are shared by federal and state governments.

Program Eligibility

There are two ways to determine whether a household is eligible to receive SNAP benefits. First, a household can meet income and asset tests that are set forth in federal law. Second, households can be deemed “categorically eligible” based on eligibility for other federal means-tested programs.4

A household is eligible for benefits under regular federal tests if it meets the following three requirements:

Has gross monthly income at or below 130 percent of the federal poverty line;

Has net monthly income (gross income minus available deductions)5 at or below 100 percent of poverty (see Exhibit 4); and

Has less than $2,000 in “countable resources.”

Countable resources are generally liquid assets, not including the value of a home and funds received from Temporary Assistance for Needy Families (TANF) or Supplemental Security Income (SSI).6 Households with at least one person who is over 60 years old or is disabled can have up to $3,250 in countable resources.

Households can bypass the regular federal tests if they qualify for SNAP through categorical eligibility, which was part of the 1996 welfare reform law. Congress gave states the option of making Food Stamp eligibility determinations using the eligibility criteria of programs funded by the TANF block grant. In giving states this option, Congress wanted to streamline SNAP administration, reduce eligibility determination errors, and expand eligibility for low-income working families and seniors. More than 40 states have chosen to align SNAP eligibility criteria with the criteria of TANF-funded programs — this alignment is referred to as “broad-based categorical eligibility.”7

States that choose to take advantage of broad-based categorical eligibility are given substantial flexibility in how to do so. Illinois has chosen to institute broad-based categorical eligibility in a way that makes any household with a gross monthly income at or below 130 percent of poverty eligible for SNAP. Because broad-based categorical eligibility in Illinois does not include an asset test, households are not penalized for savings. This is particularly important because, without broad-based categorical eligibility, many more Illinois families would be forced to meet the federal $2,000 asset test, which is not linked to inflation and has remained unchanged since 1986. In inflation-adjusted terms, the value of the test has fallen by 48 percent. To have retained its value, the test would now need to be over $3,800.8

Increased SNAP Benefits in Response to Great Recession

As part of the American Recovery and Reinvestment Act of 2009 (ARRA), which was passed in response to the recession, Congress increased the maximum SNAP benefit level by 13.6 percent. This was seen as a very quick way to stimulate the economy, adding $64 to the monthly benefit of a three-person household. This SNAP add-on was to remain in effect — and override USDA’s annual increases based on food-price inflation ─ until inflation “caught up” to the enhanced maximum benefit amount. At the time, the Congressional Budget Office estimated this would occur in fiscal year 2018. However, Congress subsequently reduced future SNAP benefits by moving up the termination of the SNAP add-on to March 31, 2013. After that date, the maximum monthly benefit amount will be reduced and again be based on the USDA’s calculations of food-price inflation.9

Current Budget Debates

Polling consistently shows strong public support for SNAP and strong opposition to cutting food assistance programs. In a recent survey conducted by Hart Research Associates, 57 percent of respondents said that the Food Stamp program (SNAP) was very important for the country, and 75 percent said that cutting food assistance was the wrong way to reduce federal government spending.10 Nonetheless, the substantial increase in SNAP enrollment in recent years has led to calls in Congress for cuts in program spending.

For example, in February, the House of Representatives passed a budget for fiscal year 2013 that contained large cuts to SNAP. The plan would have converted SNAP from an entitlement program to a block grant to states and would have cut funding by $134 billion over the next decade. Such cuts would be devastating for families in need. If the cuts came only from reducing eligibility, 8–10 million people would lose benefits. If the cuts came only from reducing benefits, a family of four would see its benefits cut by about $1,100 a year. Either way, cuts of this magnitude would potentially put all SNAP participants in Illinois at risk.11

The deep proposed cuts to SNAP have been justified by pointing to the increase in program enrollment and expenditures. However, the growth of SNAP has been largely driven by the dramatic increase in the need for food assistance in the wake of the Great Recession and the efforts by most states to increase SNAP participation among those eligible. While concerns about the prospect of large ongoing federal budget deficits are certainly legitimate, SNAP is simply not a long-term driver of our nation’s fiscal problems. Furthermore, the increases in SNAP enrollment appear to have leveled off, and the CBO projects that SNAP spending will continue to decline on its own as the economy recovers and need decreases. By 2022, SNAP spending as a share of gross domestic product (GDP) is expected to return to pre-recession levels.12

The Farm Bill

SNAP is authorized by Congress through the “Farm Bill,” which sets much of U.S. agricultural policy. The Farm Bill is usually on a five-year cycle, although it was last renewed one year late in 2008. Most programs in the 2008 Farm Bill, including SNAP, expired on September 30, 2012. However, many of these programs, including SNAP, continue to operate because Congress has provided funding through March 2013. With the current political environment demanding cuts in nearly all areas of the federal budget, the House and Senate Agriculture Committees have both been searching for ways to cut Farm Bill spending. Because SNAP accounts for over 78 percent of 2008 Farm Bill spending, it is a conspicuous target.

Proposed Farm Bill Cuts to SNAP

Both the U.S. House and Senate have been working on creating a new five-year Farm Bill. In June, the Senate passed its version of the legislation, which included a $4.5 billion cut to SNAP. This cut would affect families who receive higher SNAP benefits based on their dual enrollment in SNAP and the Low Income Home Energy Assistance Program (LIHEAP). The cut would not affect Illinois residents, however, because the state does not use the dual enrollment option.13

The House Agriculture Committee passed its version of the Farm Bill in July. This bill includes the same $4.5 billion cut as the Senate bill, but then cuts an additional $12 billion from SNAP over 10 years (see Exhibit 5). Most of the reduction comes from prohibiting the use of broad-based categorical eligibility. CBO estimates that this cut would cause 1.8 million individuals a year to lose SNAP benefits. Moreover, if broad-based categorical eligibility were ended, CBO calculates that 280,000 school-age children nationwide would lose automatic eligibility for free school breakfast and lunch.14 The Fiscal Policy Center estimates that more than 10,000 children in Illinois could lose this automatic eligibility.

The House Agriculture Committee’s Farm Bill would also eliminate funding that is designed to improve SNAP’s efficiency and effectiveness. This includes eliminating both a $480 million award program for states with high or improved SNAP performance and $50 million in grants that are designed to simplify application systems and increase program participation.

The combination of ending broad-based categorical eligibility and reducing incentives for states to improve SNAP participation would endanger significant progress that has been made since 2000, particularly for children. Between 2000 and 2009, the SNAP participation rate among eligible children increased from less than 72 percent to nearly 92 percent.15

Current Status of Farm Bill

While the Senate has passed its version of the Farm Bill, House leaders have not yet brought the House Agriculture Committee’s bill to the floor. News outlets have reported that House Republicans are split on the legislation — some believing the cuts are too deep and others believing they are not deep enough.16 The current Farm Bill expired on September 30, and Congress does not plan to return until after the November election. Nonetheless, SNAP benefits will continue to be funded until at least March 31, 2013, the date through which Congress has extended funding operations of the federal government.

Conclusion

The proposed cuts to SNAP would increase hardship for vulnerable children and families in Illinois and across the nation. Taking away the state option to use broad-based categorical eligibility would purposefully make it more difficult for low-income families to qualify for SNAP benefits and would needlessly make program administration more difficult. The current Farm Bill proposals would erode a crucial part of the safety net that prevents millions from being pushed into poverty and alleviates poverty for millions more.

Various research studies show that Food Stamp/SNAP participation is associated with better birth outcomes, lower risk of child health problems related to inadequate nutrition, and improved academic learning.17 To avoid such negative outcomes and ensure that low-income families and children can afford proper diets, members of Congress should reject cuts to SNAP. Our representatives should instead recognize SNAP’s importance and allow enrollment and spending to decrease naturally as the economy improves and struggling families regain their footing.

About the Fiscal Policy Center

The Fiscal Policy Center (FPC) at Voices for Illinois Children provides timely, credible, and accessible information and analysis on fiscal issues that affect children, families, and communities in Illinois. The FPC is a member of the State Fiscal Analysis Initiative (SFAI), a network of nonprofit organizations in more than 40 states. SFAI is coordinated by the Center on Budget and Policy Priorities, a Washington, D.C.-based research organization and strategic policy institute that works on a range of federal and state issues.

The Fiscal Policy Center is funded by the Annie E. Casey Foundation, the Center on Budget and Policy Priorities, the Chicago Community Trust, and the Ford Foundation. We thank them for their support but note that the findings and conclusions presented here are those of FPC alone and do not necessarily reflect the views of these funders.

For additional information on the FPC, contact Larry Joseph, Director of the Fiscal Policy Center, at ljoseph@voices4kids.org or 312-516-5556.

For additional information on this report, contact David Lloyd, Policy Analyst at the Fiscal Policy Center at dlloyd@voices4kids.org or 312-516-5557.